7. Division X produces a single product for both Division Y and an external market. It has spare capacity to produce another 20,000 items. Additional details for Division X are as follows: Information for Division X Price of product sold to outside market Current transfer price Variable cost per item made in division Fixed costs per item (based on budget) Division Y has requested a further 5,000 items. £25 £20 £12 £6 What is the minimum price that Division X should ask per item? (a) £12 (b) £18 (c) £20 (d) £25
7. Division X produces a single product for both Division Y and an external market. It has spare capacity to produce another 20,000 items. Additional details for Division X are as follows: Information for Division X Price of product sold to outside market Current transfer price Variable cost per item made in division Fixed costs per item (based on budget) Division Y has requested a further 5,000 items. £25 £20 £12 £6 What is the minimum price that Division X should ask per item? (a) £12 (b) £18 (c) £20 (d) £25
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![7.
Division X produces a single product for both Division Y and an
external market. It has spare capacity to produce another 20,000
items.
Additional details for Division X are as follows:
Information for Division X
Price of product sold to outside market
Current transfer price
Variable cost per item made in division
Fixed costs per item (based on budget)
Division Y has requested a further 5,000 items.
£25
£20
£12
£6
What is the minimum price that Division X should ask per item?
(a) £12
(b) £18
(c) £20
(d) £25](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F882ce437-6984-48a2-b1c1-0c70a26630a5%2Fe9cfe7bd-a23a-47d6-aaa6-10a0d4207554%2Fq0w3fip_processed.jpeg&w=3840&q=75)
Transcribed Image Text:7.
Division X produces a single product for both Division Y and an
external market. It has spare capacity to produce another 20,000
items.
Additional details for Division X are as follows:
Information for Division X
Price of product sold to outside market
Current transfer price
Variable cost per item made in division
Fixed costs per item (based on budget)
Division Y has requested a further 5,000 items.
£25
£20
£12
£6
What is the minimum price that Division X should ask per item?
(a) £12
(b) £18
(c) £20
(d) £25
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